The business of originating and servicing second liens continues to struggle with lenders cutting back on production and allowing their receivables to run off, according to new figures compiled by ASR sister publication National Mortgage News (NMN) and the Quarterly Data Report (QDR).

At June 30 the nation’s banks and nondepositories serviced roughly $670 billion of seconds, a 5% decline from the same period a year ago.

The nation’s top three servicers of seconds – Bank of America, Wells Fargo & Co., and CitiMortgage – saw their receivables fall by 10%, 11%, and 13%, respectively in 2Q11.

Wells and BofA ranked first and second among second lien originators in the quarter, NMN found.
Wells originated $3.2 billion of seconds, a 6% decline from a year ago with B of A funding $1.7 billion, a 12% drop.

The only top ranked HELOC lender showing a big gain in second lien production was People’s United Bank, Bridgeport, Conn., which funded $258 million of seconds in 2Q, almost double what it produced a year ago.

When NMN/QDR surveys lenders it asks for a combined HELOC/HEL volume. (HELOCs, or home equity lines of credit, are 'open-ended’ lines. HELs, or home equity loans, tend to be 'close-ended' and for a set amount.)

Over the past four years home equity lending has been hurt by declining home values, high delinquencies, and tighter underwriting standards on the products.

Second liens were once central to '80-10-10’ loan structures, a product that has become nearly extinct during the housing crisis.

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